Catalina Restaurant, Rose Bay. In doing so he exercised powers as a Minister under the. Mining Act 1992. A departmental
Judgment Summary Supreme Court New South Wales
R v Macdonald; R v Maitland [2017] NSWSC 638 Adamson J The Supreme Court has sentenced Ian Macdonald, former Minister for Mineral Resources, and John Maitland, former mining union official, for offences concerning the allocation of a coal resource at Doyles Creek. Mr Macdonald was convicted of wilful misconduct in public office and sentenced to imprisonment for a period of 10 years, with a non-parole period of 7 years. Mr Maitland was convicted of being an accessory before the fact and sentenced to imprisonment for a period of 6 years, with a non-parole period of 4 years. Mr Macdonald allocated a substantial coal resource to Doyles Creek Mining Pty Ltd (DCM, of which Mr Maitland was a director) in 2008. According to departmental guidelines, which Mr Macdonald had approved, the resource was a major stand-alone mine, meaning it should have been allocated through a competitive process; either tender or expression of interest. Had a competitive process been adopted, applicants would have been invited to offer financial contributions to the State in return for access to the resource. Mr Macdonald directly allocated Doyles Creek to DCM without any competitive process, against the advice of his Department. First, he granted DCM consent to apply for an exploration licence, and then he granted the company Exploration Licence No 7270 which was signed over dinner at Catalina Restaurant, Rose Bay. In doing so he exercised powers as a Minister under the Mining Act 1992. A departmental officer estimated that the State lost $50-$100 million by failing to allocate the resource through a competitive process. By their verdicts, the jury found that Mr Macdonald was substantially motivated to benefit Mr Maitland and DCM, and not motivated to any significant degree by the object of furthering the public interest. The Court found that the direct allocation of the valuable resource was a “gift” and intended to be so. DCM proposed to build a training mine at Doyles Creek alongside a commercial mine. The idea of a training mine had been floated before and some saw this as a worthy venture due to the skills shortage in the mining industry. However, the Court found that the training mine was merely a device to mask the offenders’ misconduct. Of the 91 million tonnes of coal, a miniscule amount (150,000 tonnes, less than 0.165%) was to be used for the training component of the mine. That section of the mine had no practical connection to the commercial section, and indeed its physical characteristics made it unsuitable for longwall mining (which is mechanised and much more profitable). The Court found that any company would have been willing to use the small section for a training mine in order to gain access to the substantial coal resource, valued at $1 billion (undiscounted) over the life of the mine. The Department sensed something was amiss. In 2007 a departmental briefing note advised Mr Macdonald that there would be “major policy difficulties” and “potential probity This summary has been prepared for general information only. It is not intended to be a substitute for the judgment of the Court or to be used in any later consideration of the Court’s judgment.
issues” with direct allocation to DCM. Senior officers realised that it did not make sense to give away a valuable resource and forego the opportunity to obtain a financial contribution for the State at a time when substantial contributions had been paid for other allocations, including Caroona and Watermark, during the coal boom. The Department provided frank and fearless advice against the direct allocation up until the time the decision had been made, at which point they became obliged, as civil servants, to implement the Minister’s decision. Despite the strenuous efforts of both offenders, the proposal never gained the support of the Central Executive of the CFMEU or the Minerals Council. The head of the Mining Division of the CFMEU was concerned by the fact that Mr Maitland had secured no guarantees that trainees from the mine would be employed by mining companies. The CEO of the Minerals Council said that industry was not against safety initiatives, but saw the training mine as a Ministerial pet project and sensed that the Council was potentially being set up to support something against its interests. The offenders were both involved in a strategy of obtaining letters from third parties which discussed the severity of the skills shortage and, later on, the benefits of the proposed training mine. Whilst the letters were addressed to Mr Macdonald, the Court found that the ultimate audience was his colleagues and the public. The letters were designed to forestall the criticism that was inevitable once the public and industry became aware of the allocation to DCM. The offence of wilful misconduct in public office is a common law offence in New South Wales and carries no maximum penalty. The Court found that Mr Macdonald’s conduct was a substantial breach of the public trust vested in him, as Minister, by Parliament under the Mining Act. The State’s resources were squandered by the very person who was trusted to safeguard them. The damage done cannot be measured in material terms. His offending damaged the institutions of government and public confidence in them. The whole community was betrayed. Mr Macdonald’s offending was extremely serious. The Court found Mr Maitland’s conduct to be less serious than Mr Macdonald’s. He was not a public official and his duties were owed to a private company. The Court found that Mr Maitland was motivated by financial gain, and not just by concerns for mine safety. His family company sold its shares in NuCoal (which took over DCM) for $6,151,149.26 after the allocation of Doyles Creek. The Crown has proposed to apply for a pecuniary penalty order against Mr Maitland for that sum, but this is not a mitigating factor.
This summary has been prepared for general information only. It is not intended to be a substitute for the judgment of the Court or to be used in any later consideration of the Court’s judgment.
